Judge Rules Thant IRS Owes $234M To Sovereign Bancorp

A Massachusetts federal judge on Friday ruled that Sovereign Bancorp can recover some $234 million that it paid in taxes, interest and penalties to the federal government over an international securities transaction, finding the deal had a business purpose outside its tax benefits.

Granting a motion for summary judgment by Sovereign — now Santander Holdings USA Inc. — and denying a cross motion for partial summary judgment by the federal government, U.S. District Judge George A. O’Toole Jr. decided that the so-called structured trust advantaged repackaged securities, or STARS, transaction had economic substance.